Student loan debt relief

[jb603]

I claimed my child as a dependent on 2021 tax return.  As such, he is not eligible for the new student loan debt relief.  Is it reasonable to amend my 2021 tax return and take him off as a dependent, so that he can get the student loan debt relief?

He was full time student until May 2021, then lived with me. I did pay for most of his living expenses.  He did not have any earned income to report on a separately filed return. 

If it is acceptable to make the amendment, would I then have him file taxes with $0 income for the year 2021?

Thank you

[Anonymous_]

Not sure if @Hal_Al can answer this one. ??

[Opus 17]

The tax laws apply to your child in this case, not you.  Your child must answer "yes, I can be claimed as a dependent" on their tax return if they can be claimed, even if they don't want to be claimed, and even if there are other reasons why it would be better not to be claimed.  Answering "no, I can't be claimed as a dependent" may, in some cases, constitute fraud.

There is no requirement that you actually claim your child on your tax return, only that your child must answer "yes, I can be claimed" on their tax return if they can be claimed.  

What I don't know (because I have not studied the issue) is whether the trigger for disqualification from the student loan relief is the parent claiming the child, or the child being "claimable."

Depending on your child's financial and living arrangements, we could also discuss whether they qualify to be claimed in the first place, if you want to go down that road.

[Critter-3]

Until this matter gets thru the courts and more information is available no one can answer your question so I would not do anything until the rules are set and posted. 

This is the official Department of Education FAQ and information on the Relief. 

https://studentaid.gov/debt-relief-announcement/

Student Debt Relief Plan: Am I impacted?

On August 24, 2022, President Biden, Vice President Harris, and the U.S. Department of Education announced announced a three part student loan debt relief plan to help federal student loan borrowers following the pandemic. The three part plan includes an extension of the pause on student loan payments, debt cancellation, and proposal to create an income-driven repayment plan to help lower future monthly payments.

Here are some resources to help you understand the provisions within the plan that can might affect you:

• TurboTax Blog: Student Loan Debt Relief Announced: Here’s What it Means For You
• TurboTax Help Article: Is canceled, forgiven, or discharged debt taxable?